¹ The estimated WAL for each Note Class is based on full amortisation with a CPR of 20% p.a. for the first 18 months and 25% p.a. thereafter, the Stepdown Criteria being met from the earliest possible date and the Trust Manager Call Option being exercised at the earliest possible date.

All tranches were priced at par.

Settlement Date: Thursday, 24 April 2014

Clean up call: Any Payment Date occurring:

From April 2019 (ie 5 years); or

When the aggregate Invested Amount of the Notes outstanding is less than 20% of the aggregate initial Invested Amount of the Notes.

Commonwealth Bank of Australia and National Australia Bank Limited were the Joint Lead Managers of the AUD denominated tranches and NAB Securities LLC and Jeffries LLC were the Joint Lead Managers of the USD denominated A1-u1 tranche.

The transaction is Pepper’s first public RMBS issue for 2014. It is also Pepper’s third 144A compliant issue into the US market, with the A1-u1 tranche structured with a one year legal final maturity to appeal to US 2A7 money market funds. Significantly though, it is the first time Pepper has placed a non-conforming issue into the US market.

“The inclusion of a USD tranche in our PRS non-conforming program marks another significant milestone in the long history of non-conforming issuance by Pepper, dating back to 2003. The participation of US investors, along with a small number of European investors, in our non-conforming program helps to further diversify our offshore investor base, which is vital for a frequent RMBS issuer like Pepper,” said Pepper’s Co-Group Chief Executive Officer, Patrick Tuttle. “Based on the strong response to our 2 previous prime mortgage backed issues, we were confident that the US investor base would also find this offering appealing. That said, we are thrilled with the broad investor participation in the PRS12 USD tranche. We are also delighted with the strong support that we continue to receive from loyal repeat Australian institutions, with each of the AUD tranches pricing inside the equivalent PRS 11 margins set in October 2013”, added Tuttle.

“The PRS12 issue was well supported by investors across the entire capital structure, with a total of 14 domestic and 7 foreign investors participating, many of whom are repeat buyers. Our track record and commitment to always call our term deals at the first available date, continues to attract strong support from investors, and we are now developing repeat buying from a number of US and European investors” said Pepper Group Treasurer, Todd Lawler. “This transaction demonstrates that there is genuine investor demand for Australian non-conforming RMBS paper from quality issuers with strong servicing and asset performance history. For PRS12 we were also able introduce some first-time investors to Pepper’s non-conforming programme who had only previously participated in our prime transactions. This is a strong endorsement of Pepper’s business model, the credit quality of the underlying loan collateral and our expertise as a specialist mortgage servicer” added Lawler.

“This is a benchmark transaction for Pepper, entering the US market with non-conforming assets for the first time. New investor participation as well as significant demand from repeat buyers facilitated a tightening in price across all tranches and an increase in volume compared to their two 2013 Non-conforming RMBS trades.” said Rob Verlander, Head of Debt Markets Securitisation at Commonwealth Bank of Australia.

"This is the largest Australian pure non-conforming RMBS transaction completed since the financial crisis” said Sarah Samson, Director, Debt Markets, National Australia Bank Limited. “There was a healthy level of oversubscription across all of the AUD and USD tranches, and it is great for Pepper to be able to call on the US investor market to enable this larger transaction size and pricing”.

Pepper is a diversified financial services business with specialist experience in lending, advisory and asset management across the residential, auto and equipment and commercial property sectors. It is a specialist servicer of prime and non-conforming residential mortgages and consumer loan and lease receivables. PRS12 is the fourteenth public issue of residential mortgage-backed securities backed by Pepper owned and serviced mortgages, increasing its total RMBS issuance to A$5.2 billion.